|
|
ATLANTA, Aug. 10, 1999 - Homestead Village Incorporated (NYSE:
HSD), an owner and operator of moderately priced, extended stay lodging
facilities, today reported EBITDA (earnings before interest, taxes, depreciation
and amortization) per diluted share before special charge of $0.24 in the
second quarter of 1999, compared with $0.23 per share for the same period
one year ago, an increase of 4.3%. Aggregate EBITDA for the second quarter
1999 was $21.4 million, a 44.5% increase over the $14.8 million EBITDA
in the second quarter 1998. The company had 129 operating properties
as of June 30, 1999, and seven properties under construction. Homestead
also reported a net loss per diluted share of $0.04 before the special
charge, compared with net earnings of $0.09 for the second quarter of 1998.
EBDADT (earnings before depreciation, amortization and deferred taxes)
for the second quarter was $0.11 per diluted share before special charge,
compared with $0.21 per diluted share for the prior year period.
Management Objectives: An Update In its May 12, 1999, press release three near-term objectives for Homestead
were identified. Management believes that substantial progress has been
made in meeting these goals.
Operating margins for the entire portfolio were 52.8% in second quarter 1999, compared to 60.4% in second quarter 1998. Management believes that an operating margin of 55%-57% is more appropriate for Homestead�s operations. Therefore, a series of initiatives are being introduced to reduce property- level costs, including restricting the number of new operating programs, reviewing extended operating hours, redefining job roles to improve efficiency and implementing an improved scheduling program for housekeeping personnel. Solid Operating Performance Homestead�s property-level performance for the second quarter reflects an increase in RevPAR with stable occupancy levels across the network. RevPAR for the company�s total portfolio increased 15% to $250 from $217 in the prior year. The average weekly rate increased 17% to $352 in the second quarter 1999, from $302 in the prior year period, while occupancy remained relatively stable at 71% compared to 72% a year ago. Homestead�s number of operating properties was 129 as of June 30, 1999, compared with 93 at June 30, 1998. RevPAR for the company�s same-store properties was $225 in the second quarter of 1999 compared with $226 for the year ago period. Average same-store weekly rate increased 4% to $308 from $296 while occupancy declined 3 percentage points to 73% from 76%. Properties included in the same-store universe increased from 49 properties in the first quarter 1999 to 64 properties in the second quarter. The 64 same-store properties account for 42.1% of Homestead�s investment in operating properties and accounted for 47.6% of the second quarter operating income. Twenty-three of the same-store properties are in the Southwest region and 12 are in the Southeast region. The Special Charge The company announced in its press release issued May 12, 1999, that it would take a special charge of approximately $65 million in the second quarter. The special charge reflects Homestead�s decision to curtail its development program based on the availability of financing for development and, as a result, to re-size its administrative operations to a level appropriate for a 136-property operating company. The special charge is equivalent to $0.74 per diluted share for EBITDA. Because the diluted calculation for EBDADT is anti-dilutive when the special charge is included, basic shares are used in calculating EBDADT per share after the special charge. Therefore, the special charge is equivalent to $0.95 per share for EBDADT. Approximately 67% ($43.5 million) of the special charge was a write-down of the carrying costs of Homestead�s land parcels to their estimated fair value less estimated costs of disposition. Charges related to discontinuing the pursuit of an additional 14 land sites accounted for $7.1 million of the special charge. The remaining $14.7 million of the special charge was related primarily to reduction in staffing levels, closing of administrative offices, and discontinuing new investment initiatives. Rights Offering Completed During Quarter Homestead announced on June 1, 1999, the completion of a $225 million rights offering, the net proceeds of which were used first, to repay a $200 million bridge facility and, second, to provide funding for working capital and general corporate purposes. Following the offering, total shares issued and outstanding for Homestead were 120,031,477. Outlook for the Second Half of 1999 Homestead management has continued to focus on its stated near-term objectives in the third quarter and intends to do so for the remainder of 1999. The company is comfortable with the lower-end of the range of analysts� estimates for 1999 revenues; however, the ability to meet analysts� expectation for EBITDA is dependent on the timing of overhead reductions and the implementation of property-level cost savings. Homestead Village Incorporated is an owner and operator of moderately priced, extended stay lodging properties throughout the United States. Focused on the business traveler, Homestead has developed a proprietary operating system to ensure its customers a consistent, high-quality, uniform lodging experience. As of June 30, 1999, Homestead had 129 properties operating in 36 markets, including 24 of the top 25 U.S. travel destination markets, and seven properties under construction, all of which are expected to open by the end of the third quarter 1999. In addition to historical information, this press release contains forward-looking statements under the federal securities laws. These statements are based on current expectations, estimates and projections about the industry and markets in which Homestead operates, management�s beliefs and assumptions made by management. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Actual operating results may be affected by changes in national and local economic conditions, competitive market conditions, changes in financial markets or interest rates that could adversely affect Homestead�s cost of capital and its ability to meet its financing needs and obligations, weather, obtaining governmental approvals and meeting development schedules, and therefore, may differ materially from what is expressed or forecasted in this press release. |
|